Rental law changes missing in action
Take a browse through any landlord Facebook group and you’d be forgiven for thinking private property has been abolished.
The Government’s never-ending war on landlords rages on, regulation after regulation, with many an investor promising to hike rents in response to the latest outrage.
In reality, little about letting out a property has changed under this Government, despite a lot of noise during the election campaign.
You can still buy multiple properties for what is clearly capital gain and sell them on with no tax burden, provided you do it outside the somewhat larger bright line test window, thanks to Winston Peters.
You can still kick someone out of a tenancy with no stated reason provided you give them 90 days – but you only need to give them 42 in many cases.
Really, you can still use the same tenancy agreement with all the same clauses you had back in 2016, as long as you cross out the bit about the letting fee.
This is all despite a Government which came to power promising the first serious change to tenancy laws in a generation, with an end to no-cause termination, limiting and codifying rent increases, more allowances for pets, and more modification of homes.
Ironically, the biggest change for landlords this term has come as a result of something the National government did in 2016, mandating underfloor and overhead insulation where applicable from July 1 of this year, and pinging landlords with a $2000 fine if they disobeyed.
There has been some movement, but it has been either piecemeal or slow. The Government sliced off one of the easiest bits of tenancy reform by banning letting fees in a single bill last year.
Tax changes have extended the bright line test and eliminated negative gearing – which will likely drive up rents over time. The Healthy Homes Standards will make all rentals are warmer and drier – in several stages from mid2021 to 2024.
The larger package of tenancy law reforms went out for consultation in the middle of 2018, finishing in October – almost a year ago. Then-housing minister Phil Twyford indicated he wanted the law in force in 2020. Since then it’s been crickets – nary a peep from any of the ministers, let alone a draft bill.
A bill this large, if it ever does emerge, will take at least six months to go through a select committee process.
Realistically, there is now no chance that it will be in place for the start of 2020, when many new tenancies begin, particularly for students, and it will be a race even to get something passed before the election.
The confusion and lack of work was really brought home when the prime minister reshuffled the housing portfolio and it was unclear – for weeks! – who would be taking rentals from Twyford.
Eventually it emerged that associate minister Kris Faafoi would pick it up, apparently because it fitted in well with his power over public housing. (Housing NZ is the largest landlord in the country.)
The wall of silence is enough to make you wonder if the Government has got cold feet.
As he put forward various changes to the property landscape, Twyford was told repeatedly in official advice that the perception of moving too far, too fast, could drive rents up by encouraging landlords to quit the market as they felt under siege.
While not that many homes were likely to sit empty, when owner-occupiers buy former rentals they tend to have fewer people in each house, stretching the supply and demand equation so rents everywhere inch upward.
If the Government has given up on reforming the rental market then it should say that, loud and clear. It would be humiliating but at least clear things up, and give the third of the country who rent a chance to think more clearly about their vote next year.
National has run an effective campaign on rents, which have spiked in Wellington since the change of government but are generally increasing at a similar rate to when National was in power.
Thus far the party has no real new policy promises for renters – other than the long-promised reform of the Resource Management Act to get more supply on board. National will need to do more than this to win over a serious swath of renters, no matter how much of a catastrophe KiwiBuild is.
Given these changes are often zero-sum (rental rights come at the expense of landlord rights), that seems unlikely.
Greens co-leader Marama Davidson has been very keen for her party to soak up as much of the renter vote as possible. But it’s proved difficult for the party to really separate itself from the Government on this issue. Davidson was with Twyford when he announced that package of law reforms we are still waiting to see detail on. And the long-pushed-for rent-to-buy segment of KiwiBuild is still months away from any detail.
Delays are natural in government. Haste is generally the enemy of good law. But there’s a reason governments like to do things in their first 100 days, and it isn’t just PR. Time is the enemy of progress.
The longer you wait to change something the more the reasons not to do so pile up, the more the current system gets embedded. That’s how we ended up with ancient tenancy laws in the first place.
If the Government has given up on reforming the rental market then it should say that, loud and clear.